In spite of inflation, spiking interest rates and the threat of recession, 2022 was a great year for corporate Canada, with the biggest companies in the country having more than rebounded from COVID
With the exception of health care, weighed down by the poor performance of cannabis companies, every sector in Canada is booking more sales and EBITDA than in prepandemic times. A majority of industries are recording higher net income as well, with the overall 40 per cent gain in net income bringing the total for the 230 companies to a little less than $175-billion in the first nine months of 2022.
At the three major grocers – Loblaw Cos. Ltd., Empire Co. Ltd. and Metro Inc. – gross profit margins increased by 0.4 percentage points to 2.7 percentage points in the first nine months of 2022, versus 2019. That may not sound like much, but with billions of dollars in sales, small increases in margins can yield big increases in profits.
The financial sector has received the most attention from the federal government, which has targeted what it believes to be excess profits by increasing the corporate tax rate and introducing a special fee – a “Canada recovery dividend” – on all larger banks and insurance companies. The profit gains came despite the fact the banks began to prep in 2022 for a downturn in 2023; they recorded extra provisions for potential future loan losses – an expense – which lowered net income.
Two of the biggest winners were what are called, broadly, resource industries: the materials and energy sectors. WTI crude oil, priced at US$45 to US$60 per barrel for most of 2019, traded between US$80 and US$120 for much of the first half of 2022.
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